Next Up: The Aussie Dollar?

Posted October 29, 2007 | 02:22 PM (EST)



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Five Kangaroos and climbingFive years ago, the Australian dollar was about worth about US $0.55. (You can look this up here.)

It was hovering around US $0.75 the last couple of times I was down there.

I peeked back over the summer, and it was sitting around US $0.83.

Today I glance down, and it's at US $0.92. That's a big move -- over 10 percent just in the last few months.

If current trends continue (and thanks to enormous trade and budget deficits, they probably will), it may not be long before the Canadian dollar is joined by the Australian dollar in passing parity in its U.S. exchange rate.

At least this one has kangaroos on it. Five of them, in fact. So, bouncy, at least.

Last year, Princeton economist and New York Times columnist Paul Krugman notably suggested that the dollar would eventually suffer a "Wile E. Coyote moment," when dollar holders would suddenly notice they'd long ago run over the cliff and hadn't had anything under their feet in some time.

Here's a recent amplification on that, including a brief look at theories as to what's keeping the coyote in the air, by the head of Europe's Centre for Economic Policy Research.

Yikes. Just don't look down, I guess.

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